I'm becoming torn on trading the euro and mainly against the dollar
On the one hand we've got ECB QE coming and I'm starting to feel that one last downside QE hurrah in the euro could happen and then we hit the bottom and start going back up
On the other side, the US rate game could still give it another decent shove lower, and keep the downside pressure on if rates carry on rising.
There's been some minor positive signs building for the eurozone. Some numbers look to have been improving, as have some countries. Take Italy and their 2014 GDP numbers earlier, three years in the negative but still on an upward trend.
The signals are there that maybe Europe has at least stemmed the falls but the worry is whether any bounce we get is sustainable or dead cat-ish. I don't think we're at green shoot level yet but the seeds have been planted and are being watered.
Overall I'm looking for the balance to tip towards euro longs as there's going to be a big move if it turns. The market is hugely short and the tide will turn at some point. The hard part (as always) is getting the timing right.
I think a QE induced push lower might tempt me into starting to build longs, while looking to scale in further oif expectations rise for an earlier rate rise. If rates do start rising in the middle of the year that could just give better levels to scale into but once the elephant is removed from the room, further euro declines could be limited.
Both the UK and US are looking to normalise rates and policy after the last 7/8 years of throwing the kitchen sink at their economies. Europe still lags but will catch up at some point. Whether that's through growth themselves or the others faltering means the same thing for the direction of the euro.
What do you folks reckon?
